The consumers requirements should not be the concern of ASIC or anyone else. It's none of their business whether the client wants I/O or P&I loans. I am fed up with these inane institutions thinking they can tell us what we should be investing in and how we should be structuring our finances. I have been successfully investing in property for over 15 years.

I and my clients didn't need the likes of ASIC in the past and we dont need them now.

The Govt needs to step in ans reign in these powers as it will lead to massive reductions in lending and the unintended consequences could be huge. We have already seen the start of this with sizeable reductions and its bound to get worse before these "know-all" clowns in ASIC realise the damage that has been done.

The lenders are the ultimate approval point and the ones who actually lend the money, in the structure THEY determine. I can put forward a proposal with Int Only repayments, as that is was best suits the client, only to have the lender say they will only do it P&I.

ASIC beter start investigating borrowers who think Int Only is the best loan structure and give them a good talking to!

It concerns name that all the information they really need is already there unless that are going to look at if the loans were "not unsuitable" for the particular loan and client?I really hope they understand what they are looking at and what their ultimate objective is?

Why don't they investigate how clients who have come to me for a home loan and I cannot help because they have no financials have got a loan via major bank branch?

Do the same rules, requirements not apply? Apparently not because branch managers have a DUA to push loans through purely based on a clients' bank statements and gross turnover whilst brokers have to rely on net profit.

Or another branch manager who stole a deal from me when I sent clients there to get an account opened.

After attending the FBAA conference I was so pleased at the calibre of speakers they presented with. I had the privilege of sitting through Michael Saadats session and while I was, like many others, disgruntled by ASIC, hearing straight from him it was all made clearer.

ASIC are trying to keep the industry as a whole honest, not just brokers. Their aim is to have a level playing field.

Good job to the FBAA for having them there, great work ASIC for opening up to real questions straight from the brokers... And to Leah for organising the speakers and whole event. Job well done I say, finally someone is listening to what brokers want and need.

ASIC what do we do if the client specifically wants IO? We are not licensed to give financial advice so have no place in telling someone that is unsuitable do we? If they can afford the P&I repayments which we have to prove what is one to do, turn them away?

And while we're at it why don't you actually look at why housing (rent or mortgage) is so burdensome in the first place... Housing is a basic necessity & no one should have to struggle so hard just to afford a basic place for their family to live.

Wow mention clawbacks or ASIC and out they come to play. At the end of the day we all have our responsibilities. ASIC can do what ever they like I have nothing to fear so therefore I don't give this stuff a second thought.

Investors in particular insist on interest only loans to maximise the tax deductions. If they have spare funds they should use those to repay non-deductible debt such as credit cards or home loans.

As mentioned in my letter, there are several special occasions when owner occupiers want an interest only loan, even if its for the first 12-24 months while they sell other property, so they can ultimately make a sizable reduction in their home loan.

If ASIC think its because lenders and brokers recommend interest only payments to reduce the commitment level and help borrowers get a larger loan, they couldn't be more wrong.

All lenders require that if, for example, a borrower requests a standard 30 year loan with the first 5 years being interest only, then the serviceability calculator will automatically recalculate the loan repayments as if the loan term is 25 years (obviously, because nothing is paid off in the first 5 years, so the balance must be repaid over the remaining 25 years).

By shortening the effective term in the serviceability calculator to 25 years, and consequently increasing the repayments, the loan amount the applicants can apply for is actually reduced if they insist on an initial interest only period.

In other words, the amount that can be borrowed is less for an interest only loan compared to a principal & interest loan. I bet ASIC don't understand this.

I've found over the past 29 years as a broker that Government regulators often don't understand such intricacies of the mortgage industry.

In any event, in their ill-advised wisdom, ASIC and APRA has put pressure on lenders to charge considerably higher interest rates on interest only loans, particularly for owner occupiers. I note that one particular bank, on their "Base Variable Rate Home Loan" charges 5.13%pa variable for an interest only owner occupier home loan, compared to the rate of 4.32%pa, for a normal principal and interest home loan, that’s a whopping difference of 0.81%pa if you really wanted interest only.

No doubt this rate gouging arises from both Government pressure, and the willingness of banks to profiteer from the situation.

Therefore, if you have a current interest only owner occupier home loan from this lender, you either suffer a 0.81%pa higher interest rate, or are forced to switch the repayments to principal and interest. Same applies to investors with the predominance of interest only loans, they either switch to principal and interest or suffer the higher interest rate, either way it has an adverse impact on their cash flow.

Let’s all ponder other consequences from putting the squeeze on the residential investor market. There's certainly no need for the Government to consider removing negative gearing to improve tax receipts and slow down growth in residential investment activity, it and the banks are doing that very effectively already. Imagine compounding the situation by removing negative gearing from future established house purchases by investors. I don't think they'll do that and risk a collapse in residential property values.